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Tesco Organisational Structure

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Business Studies

A little help makes a big difference. Our motto 'every little helps' goes beyond just helping with your shopping. We're also committed to helping customers, colleagues, communities, and the planet.

-tesco.com

Tesco's foundations are built on its three core values, which influence the organizational culture within the company. On top of its core values, the organizational structure also plays a huge role in the operations of the company. The company's hierarchical, product-based and decentralized structure comes with various benefits and limitations. Let's examine this in more detail.

Introduction to Tesco

Tesco PLC is a multinational grocery and general merchandise retailer. It was founded in the East End of London in 1919, where Jack Cohen, having left the Royal Flying Corp at the end of the Great War, used his money to buy and resell surplus groceries from a stall.

In 1924 the first own-brand product, Tesco Tea was sold, giving the company's name. While being a leading multinational retailer, Tesco is currently the biggest supermarket in the United Kingdom with almost 4 thousand stores operating. It also operates in several other countries in Europe such as Hungary, Czech Republic and Poland, and some countries in Asia such as Thailand and Malaysia. According to the company's annual report from 2021, its group sales that year equalled £53.4 billion alone.

Tesco’s organisational structure

According to the latest data from 2021, the multinational retailer employs more than 360 thousand people. Tesco's organizational structure consists of three groups of employees at the top, mediate and base level of management.

At the top level , there is a board of ten directors with the chief executive officer (CEO), Ken Murphy. Then, there is a mediate level which consists of five committees: audit committee, corporate responsibility committee, nominations committee, remuneration committee and disclosure committee (see Figure 1).

Tesco Organizational Structure - StudySmarter Original

Figure 1. Tesco Organizational Structure - StudySmarter Originals.

After the Tesco PLC board and committees, there is a base level of management , where employees are divided into specific regions. Here, the organizational structure starts with a regional manager at the top. Then, there are store managers and three other managers below them: food trading managers, non-food trading managers and personnel managers. All of the three managers have some people below them such as fresh food section managers, ambient food section managers, electrical section managers, clothing section managers and personnel assistants (see Figure 2).

Tesco Organizational Structure - StudySmarter Original

Figure 2. Tesco Organizational Structure - StudySmarter Originals.

There are different types of organizational structures regarding:

  • decision power (centralized and decentralized organizational structures),
  • leaders and layers of management (flat and tall organizational structures),
  • other types (functional, product-based and matrix organizational structures).

To begin with, Tesco PLC's organizational structure is decentralised. A decentralized organizational structure is when lower levels in a business have decision power. It is usually where the business has many locations and therefore the head office is reasonably unable to control or make decisions for all the locations.

Tesco has almost four thousand stores in the United Kingdom only. Additionally, it operates in some other countries in Europe and Asia. For this reason, it would be impossible for the board and committees to control operations across all the locations. Instead, there are regional managers in charge of specific regions and store managers who are responsible for separate stores.

Regarding leaders and layers of management, Tesco's organizational structure is tall (hierarchical) . It means that there are many leaders and layers of management. Here, managers have a narrow span of control and there is typically a long chain of command. As mentioned previously, the firm's organizational structure has three levels of management: top, mediate and base. Moreover, at all of these levels, there are several people fulfilling different functions and reporting to other managers.

The fresh food section managers are in charge of, as the name states, fresh food. They report to food trading managers who then report to store managers. Store managers report to committees who finally report to the Tesco PLC board, demonstrating the tall hierarchical structure of the organization.

Finally, the retailer follows a product-based organisational structure. It means that employees are grouped based on: a particular product they work on, customers they deal with, or a geographical area they serve. In this case, Tesco's employees are grouped based on the geographical area they serve. Every region has their regional manager. Additionally , in every region, there are store managers who are responsible for an individual store in that region.

Advantages and disadvantages of Tesco PLC organisational structure

As outlined previously, the company has a decentralized, tall and product-based structure. All of these aspects have both pros and cons.

When it comes to decision power, owing to the decentralized organizational structure, Tesco's employees at all levels have a sense of responsibility and consequently, are more motivated . Additionally, regional and store managers are able to make decisions suitable to their local area and customers. On the other hand, however, the company can struggle with achieving consistency .

Regarding leaders and layers of management, following the tall (hierarchical) organizational structure, Tesco has great progression opportunities, making it easier for the managers to perform their best work. However, having many people with more decision power above them, some employees can be less motivated as they do not have that many responsibilities. Furthermore , any changes that are implemented in the company take effect very slowly due to the long chain of command .

Lastly, due to Tesco PLC's product-based organizational structure, where all of the activities within a region are under the overall control, means that everything is coordinated better and runs more smoothly. It is easier for management to focus on a specific segment and truly fulfil customers' needs. Unfortunately, since the retailer's employees are allocated to a specific region, not based on their specific skills, they are not always directly involved in activities they are the best at and tend to lack the skills necessary for certain projects they have to work on.

To learn more about the implications of different business structures, have a look at our explanation of organizational structures.

Tesco’s organisational culture

Our core purpose:

Serving our customers, communities and planet a little better every day. (tesco-careers.com)

The organizational culture of Tesco PLC prioritises three main values: customers, communities and planet.

Customers

Tesco is a company that serves numerous different customers on a daily basis. Everything they do begins and ends with their customers. For this reason, they are one of the three main values of the company. In doing so, Tesco aims to understand their customers' needs and aims to be able to anticipate and respond to their expectations.

Communities

Communities in one of the values of the retailer. Besides providing people with food, clothes and many other products, there are some other ways Tesco serves communities. The company also supports communities by creating good jobs, supporting local suppliers and producers, or helping local causes through their community programs.

Planet

Tesco PLC declares the planted as another core aspect of their business. Focusing on sustainability, the firm's purpose is to adjust its operations to reduce its environmental impact. This applies particularly to its supply chain which is the main factor affecting the planet. Moreover, the company supports and promotes a healthier way of living.

To learn more about the importance core values have on business function, take a look at our explanation of managing organizational culture.

In conclusion, both organisational structure and culture have a huge impact on a company's internal relationships and functions. Tesco's core values and its specific structure shape and determine the way the company operates on a day-to-day basis.

Tesco Organisational Structure - Key takeaways

  • Tesco PLC is a multinational grocery and general merchandise retailer.
  • It was founded by Jack Cohen in the East End of London in 1919.
  • The multinational retailer employs more than 360 thousand people.
  • Tesco PLC organizational structure is decentralized, tall (hierarchical) and product-based.
  • Its organizational culture prioritises three main values: customers, communities and planet.

Tesco Organisational Structure

There are various types of organizational structures regarding:

  • decision power (centralized and decentralized organizational structures),
  • leaders and layers of management (flat and tall organizational structures),
  • other types (functional, product-based and matrix organizational structures).

Tesco uses a decentralised, tall (hierarchical) and product-based organisational structure.

Yes, Tesco's organizational structure is tall (hierarchical). It means that there are many leaders and layers of management. Here managers have a narrow span of control and there is typically a long chain of command. The firm's organizational structure has three levels of management: top, mediate and base. Moreover, at all of these levels, there are several people fulfilling different functions and reporting to other people. For example, the fresh food section managers are in charge of, as the name states, fresh food. They report to food trading managers who then report to store managers. Store managers report to committees who finally report to the Tesco PLC board. 

No, Tesco follows a product-based organizational structure. It means that employees are grouped based on: a particular product they work on, customers they deal with, or a geographical area they serve. In this case, Tesco's employees are grouped based on the geographical area they serve. Every region has their regional manager. Additionally, in every region, there are store managers who are responsible for an individual store in the region.

Final Tesco Organisational Structure Quiz

Question

Who founded Tesco?

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Answer

Jack Cohen

Show question

Question

When was Tesco established?

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Answer

1919

Show question

Question

What was the first Tesco’s own brand product?


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Answer

Tesco Tea

Show question

Question

Is Tesco the biggest supermarket in the UK?

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Answer

Yes

Show question

Question

How many stores does Tesco have in the UK?

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Answer

Almost 4,000

Show question

Question

Is Tesco only in the UK?

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Answer

No

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Question

How many people does Tesco employ?

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Answer

Over 360,000

Show question

Question

Who is Tesco's CEO?

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Answer

Ken Murphy

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Question

Regarding decision power, what organisational structure does Tesco follow?

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Answer

decentralised

Show question

Question

Regarding leaders and layers of management, what organisational structure does Tesco follow?

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Answer

Tall (hierarchical)

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Question

Does Tesco follow a functional, product-based and matrix organisational structure?

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Answer

product-based

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Question

Tesco follows a product-based organisational structure. Based on what are the company’s employees grouped?


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Answer

A geographical area they serve

Show question

Question

What are the benefits and drawbacks of Tesco’s tall organisational structure?

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Answer

Tesco has great progression opportunities and it is easier for the managers to perform their work. However, having many people with more decision power above them, some employees can be less motivated as they do not have that many responsibilities. What is more, any changes in the company are implemented very slowly due to the long chain of command.

Show question

Question

What are the advantages of Tesco’s product-based organisational structure?

Show answer

Answer

All of the activities within a region are under the overall control and therefore, everything is coordinated better and runs more smoothly. It is easier to focus on a specific segment and fulfil the customers’ needs.

Show question

Question

What are the three values of Tesco’s organisational culture?

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Answer

  • customers
  • communities
  • planet

Show question

Question

Where was Tesco established?

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Answer

London

Show question

Question

Which of the following types of organisational structures describes the decision power?

Show answer

Answer

centralized and decentralized organizational structures

Show question

Question

Which of the following types of organisational structures describes leaders and layers of management?

Show answer

Answer

flat and tall organizational structures

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Question

A decentralized organizational structure is when ___ levels in a business have decision power. 


Show answer

Answer

lower 

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Question

A tall organisational structure means that there are many leaders and layers of management. 


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Answer

True

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Question

A tall organisational structure means that top-level managers have the decision power.


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Answer

False

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Question

In a tall organisational structure, managers have a ___ span of control.

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Answer

narrow 

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Question

In a tall organisational structure, there is typically a ___ chain of command. 

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Answer

long 

Show question

Question

Tesco's employees are grouped based on...

Show answer

Answer

a geographical area they serve.

Show question

Question

In a tall organisational structure, any changes that are implemented in the company take effect very slowly due to...

Show answer

Answer

a long chain of command.

Show question

Question

Customers, communities and planet describe Tesco's...

Show answer

Answer

organizational culture.

Show question

Question

Which of the following types of organisational structure describes the decision power?

Show answer

Answer

centralized

Show question

Question

Which of the following types of organisational structure describes leaders and layers of management?

Show answer

Answer

neither of answers is correct

Show question

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